Version : Feb 2024
Introduction:
The Singapore Budget 2024 for Businesses introduces a comprehensive Enterprise Support Package, totaling $1.3 billion, designed to alleviate the impact of rising costs and bolster cash flows for local enterprises. This package encompasses a range of initiatives, including a 50% corporate income tax rebate for Year of Assessment 2024, enhancements to the Enterprise Financing Scheme, and an extension of the SkillsFuture Enterprise Credit. Moreover, the budget outlines substantial investments in Research, Innovation, and AI, aiming to fortify Singapore’s position as a global AI hub. Additionally, the introduction of new tax incentives and deductions, such as the Overseas Humanitarian Assistance Tax Deduction Scheme and the Energy Efficiency Grant, further underscores the government’s commitment to fostering business resilience and sustainability.
Enterprise Support Package:
The Enterprise Support Package, amounting to $1.3 billion, aims to help Singapore businesses manage rising costs and improve cash flows. It includes a 50% corporate income tax rebate for Year of Assessment (YA) 2024, capped at $40,000, with a minimum benefit of $2,000 in cash payout for eligible companies. This measure aims to provide support across the board, offering short-term relief to struggling SMEs and rewarding companies committed to growth and sound business practices. Additionally, enhancements to the Enterprise Financing Scheme and an extension of the SkillsFuture Enterprise Credit provide further support to SMEs.
Enhancements to the Enterprise Financing Scheme (EFS):
The Enterprise Financing Scheme will see several enhancements, including a permanent increase in the maximum loan under the EFS-SME Working Capital Loan from $300,000 to $500,000. This will provide greater support to SMEs in managing their financing needs. Additionally, the maximum trade loan quantum of $10 million under the EFS-Trade Loan will be extended until 31 March 2025, supporting businesses’ internationalization efforts. Furthermore, financing for domestic construction projects under the EFS-Project Loan Scheme will be extended until 31 March 2025, with a maximum loan quantum of $15 million.
Investment in Research, Innovation, and AI:
Budget 2024 unveils a further $3 billion investment under the Research, Innovation and Enterprise 2025 Plan, focusing on areas of national priority such as advanced manufacturing, sustainability, healthcare, and the digital economy. Moreover, at least $1 billion will be invested over the next five years to develop AI compute infrastructure, talent, and industry capabilities under the National AI Strategy 2.0. These investments aim to strengthen Singapore’s competitive advantage as a global AI hub and accelerate AI innovation.
Innovation Sandboxes and GenAI Solutions:
Innovation sandboxes have been established to enable businesses to build production-ready generative AI solutions. SMEs can now receive a grant from IMDA to trial one of the GenAI solutions curated with industry and technical experts from Institutes of Higher Learning in use cases involving customer engagement, marketing, and sales.
Concessionary Tax Rate Tier for Tax Incentives:
With effect from 17 February 2024, an additional concessionary tax rate (CTR) tier will be introduced for certain tax incentives. This includes a CTR of 15% for the Global Trader Programme, Development and Expansion Incentive, and Intellectual Property Development Incentive. Additionally, a CTR of 10% will be introduced for the Finance and Treasury Centre Incentive and the Aircraft Leasing Scheme.
Overseas Humanitarian Assistance Tax Deduction Scheme:
As part of continued efforts to encourage philanthropy and inculcate inclusiveness and compassion, the Finance Minister announced a new Overseas Humanitarian Assistance Tax Deduction Scheme (OHAS) which will apply from 1 January 2025. The scheme will grant a 100% tax deduction to individual and corporate donors making qualifying overseas cash donations subject to certain conditions.
Deduction for Renovation or Refurbishment Expenditure:
With effect from YA 2025, the scope of expenditure qualifying for tax deduction under the renovation or refurbishment (R&R) scheme will include designer and professional fees. In addition, all businesses will transition to a standardized three-year relevant period starting from YA 2025 to YA 2027. This improved policy brief provides a comprehensive overview of the Singapore Budget 2024 for Businesses, incorporating additional information on new tax incentives and deductions.
Energy Efficiency Grant (EEG):
The EEG has been enhanced to support a wider range of businesses, including non-SMEs and additional sectors such as Manufacturing, Construction, Maritime, and Data Centres and their users. The grant aims to incentivize investments in energy-efficient equipment by significantly increasing the grant quantum, especially for companies making larger investments to improve energy efficiency.
EEG Tiers of Support:
- Basic Tier: Offers up to $30,000 for pre-approved energy-efficient equipment, with the government supporting 70% of the costs for SMEs and 30% for non-SMEs until 31 March 2026.
- Advanced Tier: Provides up to $350,000 across Base and Advanced Tiers for energy-efficient equipment that may not be pre-approved but demonstrates energy savings above 350 tonnes of lifetime carbon abatement. The grant quantum is computed based on the lower of the support levels under the Base Tier or the equipment’s expected lifetime carbon abatement.
Eligibility for EEG:
Singapore companies with at least 30% local shareholding, at least one local employee, and group annual sales turnover of no more than $500 million are eligible for the EEG. This includes SMEs defined as enterprises with group annual sales of not more than $100 million or group employment size not exceeding 200 employees.
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